The United States restricts Huida (NVDA-US) chip sales to China will not affect Chinese electric car players for the time being because they use automotive systems that do not include sanctioned products.
Shares in chip maker huida have tumbled about 13 percent this week after the company disclosed new U.S. restrictions on its exports to China that hit potential sales of about $400 million this quarter.
Huida’s Drive Orin chip has become a core component of assisted driving technology for Chinese electric vehicle manufacturers. These semi-autonomous driving systems are an important selling point for the companies in China’s competitive market. Some automakers are also using huida’s Xavier chips. Automotive chips are a relatively small but fast-growing segment of huida’s business.
The latest U.S. restrictions, however, target huida’s A100 and H100 chips; sales of those chips are largely attributable to the company’s larger data center business, which is used primarily in graphics processors for artificial intelligence (AI).
Bevin Jacob, a partner at Automobility, an investment and consulting firm in Shanghai, said, “No restrictions should be imposed on Xavier and Orin, and Xpeng (Xpeng)XPEV-US), Nio (Nio) (NIO-US) and other auto companies should continue to have access to these chips. “
However, Jacob still warned that future U.S. companies exporting chips related to AI and self-driving cars to China could come under “heightened scrutiny.”
Huida said in a filing with the U.S. Securities and Exchange Commission (SEC) on Wednesday (31) that, according to the U.S. government, the new rule is to reduce the risk of supporting the Chinese military. But it is unclear what prompted this specific policy move, or what will drive future practices.
Another positive message for the company is that the United States will allow huida to continue developing its H100 artificial intelligence chip in China, Huida said on Thursday (1st).
“The U.S. government has authorized Huida or its affiliates to continue developing the H100 integrated circuits for export, re-export, and domestic transfers,” Huida said in a document released on Thursday.
The company said second-quarter revenue from its automotive business was $220 million, up 45 percent from a year earlier.
According to StreetAccount records, Huida CEO Jen-Hsun Huang said on an earnings call in late August: “Our automotive revenue is changing and is expected to be our next $1 billion business.”
“The ban will not have an immediate impact,” said WeRide, a self-driving technology start-up. “We believe the two parties will continue to work closely together in terms of industry supply and demand to respond to the changing business environment and ensure the continued development of the technology. .”
Another self-driving startup, Pony.ai, and automaker Geely also said they would not be affected.